Solana (SOL) Lags Behind Ethereum (ETH) in Bitcoin (BTC) Adoption Despite Being a Major Competitor

Solana has emerged as a major competitor to Ethereum in several metrics such as users, fees, and trading volume. However, one area in which SOL is lagging behind Ethereum is Bitcoin adoption.

Despite Solana (SOL) emerging as a major competitor to Ethereum (ETH) in several metrics, one area where SOL is lagging behind is Bitcoin (BTC) adoption.

According to market analyst 21.0, there is a huge discrepancy in the amount of BTC present on the Solana blockchain compared to Ethereum. While Ethereum boasts an impressive $10 billion worth of BTC, Solana has only a meager $86 million.

This disparity is puzzling considering Solana’s low fees and relative scalability, which make it well-suited for Bitcoin use cases. Moreover, 21.0's analysis reveals that over $1 billion worth of BTC was present on Solana in late 2021.

However, most of this BTC was concentrated in the flawed soBTC token issued by the now-bankrupt FTX, which was not fully collateralized and became unredeemable after the exchange’s collapse.

The FTX collapse was a pivotal moment in Solana’s history, as its total value locked (TVL) dropped from $10 billion to $200 million (-98%). Despite many calling for its demise, the community rallied and rebuilt the ecosystem from the ground up, leading to a TVL recovery to $4.8 billion (21X).

“Despite the revitalized DeFi ecosystem, Bitcoin is still underutilized on Solana,” said 21.0 analyst Mary Zhu, referring to the lack of native BTC integration post-FTX.

“The only options for the SOL ecosystem after the collapse of FTX, are WBTC from Wormhole, and tBTC from Threshold Network,” said Zhu. “However, both are bridged solutions that use a lock-and-mint approach.”

While bridged solutions offer convenience, they have been plagued by hacks and exploits. According to data shared by Elliptic, roughly $3 billion has been lost due to these incidents since 2021.

Despite the complementary nature between the two chains, the actual adoption of BTC on Solana falls short.

“As complimentary as Solana and Bitcoin are, the actual BTC adoption has been underwhelming so far due to these shortcomings,” said Zhu. “To realize its full potential, SOL needs an easy, secure, and native way to transact Bitcoin that is suitable for both retail and institutional users.”

Several projects are currently working on solutions to bring Bitcoin natively to Solana in a trustless manner. If these efforts are successful, they could unlock tremendous growth for the SOL ecosystem and potentially position it as the go-to platform for Bitcoin-based decentralized finance (DeFi).